Late payers and bad payers
If you're lucky, your customers will pay all of your invoices on time, every time. But sometimes, even despite your best efforts, one or more of them won't pay promptly. So, here's some information to help you out if one of your business customers suddenly becomes a late or, worse, a bad payer.
We've put this guide together on the basis that most businesses want to preserve good sales relationships, even if something goes wrong with a customer on one occasion. However, covered here too, you'll also find the more rigorous tactics that are generally most appropriate to enduring and substantial bad payers (when other options really aren't suitable or you've already tried them).
First things first - what's the difference between a late payer and a bad payer?
A customer who hasn't paid their invoice on time but hasn't given you strong reason to believe they won't pay at all.
A customer who doesn't pay their invoice at all, resulting in their debt being written off at a cost to your company.
So, how do you spot a late or bad payer?
While it's impossible to know for sure if a customer will be a good payer or not, here are some key things you can do before doing business with them.
Even if you follow all of the advice above, you may still find that a customer is late with their payment. So what can you do right away?
There are two things you need to do:
1. Don't let it escalate: Enforce your rights to put a stop to any products or services being supplied to them until the invoice is paid. This will not only prevent more debt racking up, but it'll also encourage them to pay up.
2. Communicate clearly and promptly: Remind your customer of the late-payment terms in your agreement with them, including any interest or fees that they'll incur. Use post, email, and telephone if necessary, to send reminders of their invoice and to explain how they can settle their balance.
You may also want to raise the prospect of rating them, if relevant. Many businesses now offer very discoverable ratings on their customers, which may impact credit and other terms offered not just from them, but from others who rely on these ratings to manage their own business risks.
Read the full guide
Farillio members have access to all our online content
Farillio is THE trusted resource for businesses and households with:
- Self-serve guides
- How-to-do-it videos
- Interactive documents and checklists
- On-demand advice without hefty fees
If you need to do something complicated fast, we can take you through it, in plain English.
Many household names have chosen Farillio for their customers or members so we may be included in a service or product you've already purchased.
Already have a Farillio account?Sign in